Partnership agreement

Where two or more people set up a business with a view to making a profit, a partnership has been created whether or not a formal contract or deed has been executed.  However, if nothing is drawn up, it becomes a partnership at will, i.e. it can be ended at any time. Furthermore, it will become subject to the Partnership Act 1890, and there are several provisions contained in this Act that may not suit every partner. It therefore makes sense to get a formal partnership agreement drawn up. 

What sort of initial checks should be carried out?

Consents and approvals:

• are any regulatory consents, approvals and licences required for the type of business of the partnership?
• if potential partners are companies, check their articles of association
• are there any restrictions in existing agreements, for example, employment, partnership, joint venture, financing or loan documentation?

Searches:

• bankruptcy
• Companies House
• trade mark registry; and/or
• domain names.

Then the following points should be addressed in the agreement.

1. Business of the general partnership.
2. Firm name.
3. Place of business.
4. Duration.
5. Capital contributions.
6. Partnership property.
7. Profits and losses.
8. Drawings.
9. Accounts.
10. Banking.
11. Insurance.
12. Duties and powers.
13. Incoming partners.
14. Outgoing partners.
15. Outgoing partner's share.
16. Restrictions.
17. Dissolution and winding up.
18. Dispute resolution.
19. Other provisions.
20. Other steps.